American Will Pay Pilots Double to Solve Their Christmas Fiasco

American Airlines screwed up and failed to schedule pilots to fly on Christmas. They announced a solution, they’d pay pilots time and a half to volunteer to fly when they were given off, and they’d use their pilots who were on reserve to fly (but leave themselves no cushion) and that would get them pretty close to being able to operate their schedule over the holidays.

Their pilots union pushed back. And it was the pilots union that made this a big national story, getting leverage in the media letting the world know that American had a problem at a time when everyone was trying to travel for the holidays.

Yesterday American Airlines announced that they had worked things out with their pilots union and there would be no cancellations at Christmas as a result of failing to schedule people to fly. Ted Reedwrites that the work out is to pay pilots double instead of time and a half.

In a meeting Friday with representatives from the Allied Pilots Association, the carrier agreed to double time pay, said a person familiar with the discussion.

American had initially offered to pay time and a half, but APA leaders said the carrier had not consulted the union on the remedy.

All of the pilots who agreed to the time and a half remedy will automatically be kicked up to double time, the person, who asked not to be identified, told Forbes. Additionally, double time will also be offered to some of the reserve pilots who pick up holiday trips, the person said.

Since pilots can truly bring down an airline while flight attendants don’t have nearly as much leverage, two years ago another crew scheduling error at Christmas had American get away with paying legacy US Airways flight attendants a much smaller premium. This isn’t the first time American has messed up crew scheduling over the holidays.

American Airlines gave employees unilateral raises. Now they’re paying pilots more to come to work. And since American Airlines will never lose money again and they’re currently at the bottom end of the $3 to $7 billion annual profit range they’re promising investors, they will need to make up the cost somewhere. You are somewhere. Basic economy and 737 MAXs but the pilots get paid.

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Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002.
Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

Comments

At one time in the distant past I worked as a lowly clerk in a retail department store. We were unionized. We were paid 1.5x to work on Sunday, 2x to work a holiday, and lord oh lord 3x if the holiday should also fall on a Sunday (and you would be amazed at how many employees turned down the opportunity to work a July 4th Sunday!).

It’s only because of an odd quirk in US labor law (created during the transition from railroads to airlines) that allows pilots to unionize. This latest incident demonstrates — for the zillionth time — that it’s not a good idea to have highly paid employees in unions. It’s bad for the country, bad for their employers, and bad for the unionized employees themselves. But, as I always say, what are you going to do about it? Politically, the answer will always be “nothing.” America is just lucky that this nonsense is basically confined to the airline industry (through the Railway Labor Act), and does not impact the broad economy. If it weren’t confined, we’d be more like Argentina.

I’m still somewhat hesitant to endorse your theory that passengers will be the ones paying for the pilots’ windfall. In this case, as a one-time event, the payout is likely to come out of the airlines quarterly profitability (which probably won’t even hurt shareholders, because Wall Street will treat it as a “one off.”

But anyone who knows anything about economics knows that “overpaying” pilots is almost certain to eventually harm the pilots themselves, as it creates incentives to replace them. I’m 100% sure that incentive right now is to replace them with technology. We are certainly getting close to only needing one-pilot commercial aircraft, and that technology will be applied first to cargo flights. After it’s proven to be safe, it will be applied to passenger aircraft. And then half the pilot group will be gone. A bit like how a $15 minimum wage for fast food restaurants speeds the transition to ordering kiosks.

Double time ain’t all that greedy. We also don’t know how this schedule thing impacted the rest of the month… Besides, these guys already made plans expecting to be off. I’d want an incentive for cancelling my holiday plans, that’s for sure.

@Dan — Most private sector employment relationships in the USA are governed by the National Labor Relations Act, not the Railway Labor Act. Highly compensated professional employees (like pilots) generally do not have the right to engage in protected union activities under the NLRA.

As long as they fly the flights AA agreed to fly. If overpaying pilots and squeezing seats is the game plan, that is fine. they need to stick with their commitments. Overpaying and making the flight experience just makes them less competitive against ever expanding Southwest, Alaska and Jetblue who I never flew 6 years ago but now fly 70% of the time.

If American had hired one person full time to sit and double check that the scheduling system was working correctly – every day do nothing but check the system, no other duties – let’s say for $150,000 a year salary…..compare that to the cost of solving the problem by having to pay double time?

The top management should be blamed for not spending enough to keep the company running correctly – who else is at fault for the scheduling system error? Paying double time should be a lesson for the top management to support the infrastructure of the company.

Airlines have fairly thin management to run extremely complex operations. People make mistakes sometimes. I’m all for double time for someone working retail jobs, but for someone making $200 to $400 per hour and only works 12 days a month; and they were notified weeks in advance, I think double time is greed. These pilots make $200K to $450K a year. They cost more than the fuel on the plane.

Jason, the pilots do make a lot of money. Just remember when you fly your life is in their hands. How often in life do you trust another person with your fait. AA like many companies fail to spend money on IT when the entire business relies on this. This is all on AA management.

If this was a mistake fare we would all be for the airline honoring the fare. But since its some over paid pilots their being greedy. Sorry AA owns this problem and was forced to step up as they should.

@IAHPHx
Christmas did come early this year….for a rare “once” you are
right today and not bitter…maybe mrs iahphx “took care” of you and you are happy….and you don’t sound bitter
Now back to our bet….clearly you lost since younsaid brilliant dougie will solve it…but obviously spending a gazillion to fix it is not a great solution, but it is one that shows how bad management is at AA, and this is just one aspect of parker’s incompetence…
Also, as someone who grew up in argentina, I resent your remark about my beloved country…even if it is correct…but I wpuld still put France or Italy ahead of them in that category

Certainly it was the fault of management. But the union really showed their untrustworthyness in that they were not partners in the solution. Rather they extorted the airline for double pay when their pilots should be happy to have work back.

This has very little to do with holiday pay rates. All but three days in December are still normal work days. And I believe the glitch affected mostly non-holidays.

@Bruce if American management had not tried to bypass the union (what were they thinking there?) I doubt it would have ended up at 2x. They put themselves even more in a weaker bargaining position, and as a result it cost them more.

If anyone has been untrustworthy here by their actions it has been American management.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel -- a topic he has covered since 2002.

Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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